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United States v. E.L Du Pont De Nemours and Co.

United States District Court, W.D. Virginia, Harrisonburg Division

July 28, 2017

UNITED STATES OF AMERICA and COMMONWEALTH OF VIRGINIA, SECRETARY OF NATURAL RESOURCES, Plaintiffs,
v.
E.L du PONT de NEMOURS AND CO., Defendant.

          MEMORANDUM OPINION

          Michael F. Urbanski Chief United States District Judge

         Many years ago, between 1929 and 1950, defendant E.L du Pont de Nemours and Co. ("DuPont") used mercury in the manufacture of acetate fibers at its plant bordering the South River in Waynesboro, Virginia. A quarter century later, mercury was detected in the South River downstream of the plant. Since that time, many have toiled to remedy the mercury contamination problem. The proposed Consent Decree filed in the instant case is a part of that effort, focusing on natural resource damages.

         It is important to note at the outset that the proposed Consent Decree does not concern remediation of the mercury contamination under the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. § 6901 et seq.. Permitted corrective actions are ongoing to remediate the mercury released in Waynesboro. Both in the Joint Memorandum in Support of Motion to Enter, ECF No. 24, and in evidence presented at the public hearing on June 2, 2017, the parties outlined the substantial efforts being made to remediate the site of the mercury contamination.[1] These continuing remediation efforts are beyond the purview of the proposed Consent Decree, which exclusively concerns the separate issue of natural resource damages.

         I.

         On December 15, 2016, plaintiffs United States of America and Commonwealth of Virginia, Secretary of Natural Resources, filed a complaint against DuPont seeking the entry of an agreed Consent Decree. ECF No. 1. On April 20, 2017, after a period of notice and public comment, plaintiffs filed an Unopposed Motion to Enter the Consent Decree, along with a memorandum detailing the parameters of the proposed Consent Decree and responding to the public comments received. ECF Nos. 14, 15.

         The proposed Consent Decree places three obligations on DuPont. First, DuPont will pay all unreimbursed costs associated with the assessment of natural resource damages, totaling $214, 083.22.[2] Second, DuPont will pay a total of $42, 069, 916.78 to plaintiffs to be used for natural resource restoration projects. Third, DuPont will fund the renovation of the Front Royal fish hatchery to compensate for lost recreational fishing opportunities.[3] The parties summarize the settlement reflected in the Consent Decree as follows:

Like any settlement, DuPont paid more than it thought required - approximately $57 million in total - and the Trustees recovered less than they would have liked. However, the Trustees believe the funds recovered and the proposed in-kind project by DuPont, implemented in accordance with the Restoration Plan, are sufficient to address the injuries identified during the assessment process.

         Joint Suppl. Mem., ECF No. 39, at 6. The proposed Consent Decree is the largest natural resource damages setdement in Virginia history.

         In exchange, DuPont will obtain a covenant not to sue or take administrative action for natural resource damages resulting from the Waynesboro plant mercury contamination known as of the date of lodging of the Consent Decree. The proposed Consent Decree reserves certain rights to plaintiffs, including future actions against DuPont relating to mercury cleanup, or costs or damages that do not fall within the definition of natural resource damages. The proposed Consent Decree also reserves to plaintiffs the right to pursue natural resource damages of an unknown type or greater magnitude than known at the time of the entry of the Consent Decree. The parties represent that:

Agreement was reached only after substantial scientific analysis of injuries caused by the mercury contamination, significant stakeholder input into the natural resource damage assessment process, and lengthy negotiations involving experienced counsel. The Decree provides for complete funding of the projects identified in the plan for restoring natural resources to their baseline condition, and avoids the significant expenditure of time and resources - as well as the delayed environmental benefit - that litigation would entail.

         Mem. in Supp. of Unopposed Mot. to Enter Consent Decree, ECF No. 15, at 2. Of significance to consideration of the approval of the proposed Consent Decree, in 1984, the Commonwealth of Virginia ("Virginia"), setded a claim with DuPont for natural resource damages and released DuPont from any claim for "damages incurred by the Commonwealth for injury to, destruction of, or loss of natural resources with respect to the presence of mercury in the South River and the South Fork of the Shenandoah River which may have been caused by DuPont's discharge of mercury into those rivers resulting from the manufacture of acetate fibers during the period from 1929 to 1950."[4] The effect of the 1984 Release looms large in the legal risk-benefit analysis undergirding the proposed Consent Decree.

         II.

         On May 5, 2017, the court issued an order setting a public hearing on the proposed consent decree and directing the parties to address certain issues raised in the public comments, including: the amount of the settlement; the expenditure of monies on mussel restoration; the impact of the settlement on the Waynesboro area; and the expenditure of monies on the Front Royal fish hatchery for smallmouth bass and other species propagation versus a trout grow-out facility in Waynesboro. ECF No. 19. The court also requested information on site remediation.

         The court held a hearing on June 2, 2017. The parties presented testimony from a number of witnesses, including Melanie Davenport, Virginia Permitting Division Director, Virginia Department of Environmental Quality ("VDEQ"); Michael Liberati, leading DuPont's efforts at remediating the mercury contamination at its former Waynesboro plant; Anne M. Condon, Natural Resource Damage Assessment and Restoration Biologist, United States Department of Interior, Fish and Wildlife Service ("USFWS"); Gary Mattel, Deputy Director, Virginia Department of Game and Inland Fisheries ("VDGIF"); Terry Short, Vice Mayor, City of Waynesboro; and Molly Ward, Secretary of Natural Resources, Commonwealth of Virginia. The court also heard public comments from interested citizens. In addition to information presented in open court, the court viewed three South River sites: (1) the Augusta Forestry Center in Crimora, Virginia, location of site-specific natural resource damages studies; (2) riverbank mercury remediation projects in Waynesboro's Constitution Park, adjacent to DuPont's former manufacturing facility; and (3) an example of a fishing access project off Lyndhurst Road in Waynesboro.

         A. Melanie Davenport, Director of the Permitting Division of the VDEQ, was the first witness to testify at the hearing. Davenport provided background concerning mercury contamination in fish downstream of the contaminated site and historic efforts to ameliorate the problem. Davenport testified that it was initially thought that the mercury in the South River would become covered with sediment and decline in fish tissue over time. When fish tissue studies conducted in the late 1990s and early 2000s revealed that mercury contamination continued at high levels, it became clear that additional steps needed to be taken. The South River Science Team ("SRST")[5] was convened in 2001 to identify, manage and reduce risks to the public from the Waynesboro mercury contamination.

         Davenport also provided background on an earlier Consent Decree. The July 1, 2005, Consent Decree approved the settlement of a lawsuit brought against DuPont by the Natural Resources Defense Council, Inc. ("NRDC") and Sierra Club. The 2005 NRDC/Sierra Club Consent Decree[6] approved funding by DuPont of scientific studies of mercury endangerment and abatement efforts based on those studies. See Nat. Res. Def. Council. Inc. & Sierra Club v. E.I, du Pont de Nemours & Co.. No. 5:05cv30013, ECF No. 15-1 (W.D. Va. June 29, 2005). The NRDC/Sierra Club Consent Decree was amended in 2014 to provide for the "implementation of a voluntary program of remediation that is safe, effective, and reasonably necessary to address ecological and human health impacts caused by mercury contamination." Id., ECF No. 20 (Sept. 14, 2014).

         Michael Liberati, DuPont's Project Director for remediation and restoration at its former Waynesboro site, testified about the substantial research undertaken by the SRST and the eventual determination that bank erosion is the principal contributor to ongoing mercury contamination of the South River. Liberati outlined the history of on-site remediation efforts and detailed a pilot bank project designed to prevent further mercury contamination. Liberati testified that the pilot project was very successful in that it resulted in a significant reduction in mercury levels in near-bank settings. After the pilot project, work was commenced on the banks of Waynesboro's Constitution Park, a bit downriver from the pilot site, which was identified as having high concentrations of mercury and was eroding. Work was completed on the bank stabilization project in Constitution Park in February 2017 and will continue in the city shops area of Waynesboro in August 2017. Employing adaptive management techniques and building on the positive results from the pilot program, the VDEQ has approved expansion of the bank stabilization program to encompass contaminated areas of the first two miles of the South River downstream from the former DuPont facility.

         Anne M. Condon, Natural Resource Damage Assessment and Restoration Biologist with the USFWS, testified at length concerning natural resource damages resulting from the DuPont mercury contamination.[7] Condon has worked on the natural resource damage assessment for the former DuPont Waynesboro site since 2008 and has been its case manager since 2011, coordinating the injury assessment and restoration planning. Condon explained that the injury assessment and resulting Restoration Plan was subject to nearly ten years of study in two stages, injury evaluation and injury quantification.[8]

         Condon testified that the injury evaluation stage began in 2005, focusing on the impacted area of the South River downstream of Waynesboro, as well as the South Fork of the Shenandoah River, comprising more than 125 river miles. The multi-year study evaluated mercury exposure and related effects in multiple bird species, reptiles and amphibians in the South River's aquatic and adjacent terrestrial habitats. Shorter studies were conducted on mercury exposure to bats and small mammals, and fish data was collected as part of a regular monitoring program. The process evaluated injury to four ecological resources - aquatic habitat, sediments, floodplain/upland habitat, and wetlands - by studying representative resources consisting of fish, mussels, songbirds and amphibians. Lost recreational fishing also was evaluated. As regards fish, tissue samples showed elevated mercury levels in smallmouth bass and other warm water species.[9] See ECF No. 34, at 39. No mussels were present in the South River downstream of Waynesboro, although they were present upstream. Mussels provide benefit by filtering the water and adding structure to the river bottom. Condon testified that researchers collected data on mercury exposure in 50 different species of songbirds. Studies showed a 20% reduction in fledgling songbirds in mercury-contaminated swallow nests. As regards amphibians, researchers found a 68% reduction in productivity of the American toad in contaminated wetlands. Condon testified that these studies informed the calculated service loss for those categories of injured natural resources. To evaluate lost human use in the form of recreational fishing, an estimate was made of fishing trips lost and diminished due to the fish consumption ban and advisory.[10] Condon stated that they used Virginia fish license data and creel survey data to figure out the annual fishing pressure on the river and employed a literature review of papers that studied how anglers react to fish consumption advisories to derive the percentage of lost trips and avoided trips. The injury evaluation process lasted from 2005 to 2012, after which work on injury quantification began.

         As Condon described, the purpose of the injury quantification process was to quantify the extent and magnitude of the loss over time and space and equate it with the gains expected from the restoration models. The Trustees engaged a resource economist at the Department of Interior, Office of Policy Analysis, to prepare habitat equivalency analysis ("HEA") and resource equivalency analysis ("REA") models to evaluate damages. "To address the wide range of service losses at the site, the Trustees developed a multi-pronged approach to damages determination: (1) HEA for the loss of riverine, floodplain, and wetland resources; (2) REA for the loss of migratory songbirds; (3) mussel propagation and replacement analysis; (4) recreational fishing losses using trip-equivalency analysis." Condon Decl., ECF No. 15-1, ¶ 16. Condon described the public involvement in the injury assessment and quantification process, including multiple meetings with stakeholders since 2008.

         After studying the issue of injury quantification for two years, the Trustees and DuPont began settlement negotiations in 2015. "The parties disagreed over a number of issues, including the types and amount of natural resource damages, the scale and costs of appropriate restoration projects, and the extent of DuPont's legal liability." IcL ¶ 19. Once the parties agreed on a settlement amount and finalized the language of the proposed Consent Decree, the Trustees prepared a draft Restoration Plan that identified three restoration alternatives to compensate for injuries to natural resources.[11] After a public notice and comment period, [12] a final Restoration Plan was approved by the Department of the Interior, selecting Alternative B from among the three restoration alternatives. The Trustees explained their selection of Alternative B as follows:

The Trustees evaluated three restoration alternatives. Of these, Alternative B best addresses natural resource injuries and service reductions resulting from the release of mercury within the assessment area, and includes the majority of the project categories originally suggested by stakeholders. Based on the Trustees' evaluation of the environmental consequences of Alternatives A, B, and C, the NRDAR factors described in 43 C.F.R. § 11.82(d), and the potential for greater restoration project opportunities, the Trustees select Alternative B as their Preferred Alternative.
Alternative A provides no restoration options, and is therefore insufficient to compensate for natural resource injuries.
Alternative C provides all of the opportunities for restoration contained in Alternative B, as well as a trout management component. The trout project was considered because it is supported by stakeholders, provides a safe-for-consumption fishing alternative, and benefits a certain portion of the SR angler population. However, the benefits are almost exclusively directed at trout anglers, a population that did not suffer a direct negative impact from the mercury contamination in the watershed.
Redirection of funds to complete a trout-only project would decrease funds available for restoration projects to improve water quality and fish habitat that would benefit all resources impacted by mercury. Those projects, agricultural and urban BMPs in the upper SR, headwater streams, and within the City of Waynesboro, will improve riparian and aquatic habitat,
benefitting multiple resources including fish. Alternative B would allow for more funding to be allocated to those types of projects.
Because there are three differently managed stocked fisheries in the SR that are already popular destinations (Bugas 2011), the benefits of additional trout stocking and management are not sufficiently clear. Trout stocking impacts are too narrow, given the more broad benefits expected from the other restoration projects proposed in Alternative B, to devote substantial resources to the proposed trout project. Finally, the recreational fishing access improvement projects contained in Alternative B will provide substantial benefits to anglers of all fish species in the SR and SFSR, including trout anglers.
The Trustees believe that the Preferred Alternative, Alternative B, represents cost-effective and beneficial means by which to restore or replace the injured natural resources and the services they provided. Based on the restoration alternative selected in the final RP/EA, Trustees will begin to identify and evaluate additional specific project options. Compliance with the laws cited above, and any necessary permitting, will be undertaken during the planning stages of specific restoration projects.
The Trustees may implement restoration project alternatives that are not specifically identified in the RP/EA, but are consistent with our restoration objectives. Each project will be evaluated against the same restoration priorities and factors described above, and, if needed, a further review of environmental consequences will be conducted.

Restoration Plan, ECF No. 15-1, Chapter 6, at 75-76.

         Condon identified criteria for project selection, including: a connection to the injured resource, feasibility and cost effectiveness, likelihood of success and long term sustainability, and expected benefits. She indicated that there will be projects in Waynesboro, and that this settlement provided a great opportunity to do a lot of good for the watershed. Condon identified agricultural and urban best management practices to stabilize the stream bank and prevent erosion. As regards spending money on the Front Royal fish hatchery instead of a Waynesboro trout grow-out facility, Condon stated that the Front Royal fish hatchery would be cost-effective, as the state owned the land and had staff on-site. Condon added that the suggested Waynesboro trout grow-out facility did not address the fish resource injured by the mercury contamination, noting that trout are not subject to the fish consumption advisory as they do not remain in the river long enough to accumulate mercury. Condon emphasized that the settlement funds should be directed at projects to restore natural resources damaged by the mercury, informing the Trustees' decision to devote resources to the renovation of the smallmouth bass fishery rather than a trout grow-out facility having little nexus to the injury. Condon also stated that mussel propagation had the added advantage of improving water quality. The Trustees intend to hold public meetings to continue working with various stakeholders to identify specific restoration projects located near the watershed and impacted areas within the categories outlined in the Restoration Plan. Condon indicated that the natural resource damage assessments were based on ten years of study and that, "[a]fter careful review and consideration of the comments received, the Trustees continue to believe that the proposed Consent Decree is fair and reasonable, consistent with natural resource damages regulations, and in the public interest." Condon Decl, ECFNol5-l, ¶27.

         Gary Martel, Deputy Director of the VDGIF, testified that mussel restoration has proven successful in Virginia, citing the Clinch and Holston River areas. Martel noted that mussels are a high biomass foundation species that serve the important function of filtering river water, improving its quality. Martel testified that creel surveys conducted by his department in 2005, 2011 and 2016 noted anglers' preference for black bass.[13] Martel stated that the VDGIF has stocked trout in the South River since 1989, and the mercury contamination fish consumption advisory does not apply to trout as they do not reproduce in the warm water below Waynesboro, and thus are not in the river long enough to acquire mercury in their tissue.[14] Martel testified that funding the Front Royal fish hatchery would be cost-effective, address the damage from mercury contamination to smallmouth bass, and help stabilize smallmouth bass population during lean reproductive years. Martel indicated that the Restoration Plan contemplates the addition of non-powered boating and fishing access sites, with a goal of having one every five to seven miles along the South River. Martel noted that the largest portion of the settlement funds is allocated to land acquisition, and the resulting improved water quality would benefit all species of fish, including trout.

         Terry Short, Vice Mayor of Waynesboro, voiced his support for the proposed Consent Decree, indicating that the city expected to receive funding under the Restoration Plan for projects in Waynesboro, including the planned South River Preserve project.[15] Short testified that in a perfect world, he would prefer all of the settlement funds to come to Waynesboro, but felt the proposed Consent Decree was fair and in the public interest not only for Waynesboro, but for all affected communities.

         Molly Ward, Virginia's Secretary of Natural Resources, expressed her support and that of the Governor for the proposed Consent Decree. Ward indicated that from the Commonwealth of Virginia's perspective, the proposed Consent Decree met legal requirements, considered legal defenses and was based on ten years of solid scientific work. Ward was aware that "DuPont is going under some potential corporate restructuring and merger that might change the dynamic at DuPont." She also expressed concern that future administrative changes could cause additional delay for communities that have been suffering for decades. Secretary Ward closed by saying that "all of these things led me to believe that it was a good time to try to bring this issue to closure. The sooner we can get some projects on the ground for these communities to improve water quality, the sooner the habitats and the aquatic life can return, recover."

         B.

         At the June 2, 2017 public hearing, the court heard from a number of interested individuals, several whom had written the court earlier in the year. Many of the speakers were trout enthusiasts, interested in seeing Restoration Plan monies spent on a trout-specific projects in Waynesboro, including a proposed grow-out facility. For example, Urbie Nash, a South River resident, retired environmental engineer and member of the SRST, asked the court to be mindful of not wasting any of the limited settlement dollars, and noted that monies spent on mussels and smallmouth bass will not recreate the angling opportunities lost due to the mercury pollution. To that end, Nash urged that $2.5 million of the setdement proceeds be used for a trout grow-out facility in Waynesboro. Tommy Lawhorne agreed, indicating that given natural mortality, monies spent on the smallmouth bass fishery would be wasted. Lawhorne, a Waynesboro resident and co-owner of the South River Fly Shop, indicated that there were native brook trout in the South River, and that the exclusion of monies for trout resources is neither fair nor adequate. Kevin Whitfield, a Rockingham County fly fishing outfitter, echoed Lawhorne's and Nash's concerns and also questioned the lack of priority being given to the City of Waynesboro, which he termed to be "ground zero" for mercury pollution. Jay Black, from Mathews County, caught his second trout, a brown variety, on the South River in Waynesboro. Black spoke of the efforts of the South River Fund for Cold Water Conservation to promote stream bank and trout habitat restoration, trout stocking in the South River, and education. Black reminded all present that die South River in Waynesboro was "on the receiving end of nodiing short of a direct environmental blunt force trauma from DuPont's mercury, " and the "failure to meaningfully and tangibly acknowledge this gross environmental defilement" would add insult to injury. Tom Benzing, a member of the SRST, Professor of Integrated Science and Technology at James Madison University and Trout Unlimited volunteer, spoke against funding a smallmouth bass fishery and mussel restoration. Rather, Benzing viewed the trout grow-out facility in Waynesboro as the only adequate mechanism to restore lost recreational fishing trips. Absent funding for the trout grow-out facility, Benzing considered the settlement to be fatally flawed and not in the public interest. Gary Collins, a volunteer for Project Healing Waters, an organization dedicated to the rehabilitation of disabled veterans through fly fishing, urged support for Alternative C and the Waynesboro trout fishery. In particular, Collins noted the unique opportunities for disabled veterans at the downtown Waynesboro fishery, including paved walkways, covered pavilions and, rare in Virginia, stairs with handrails to access the river. Jim Josefson, a resident of the South River watershed and recreational angler, doubted the reasonableness of the settlement, citing the Restoration Plan's failure to include "lost nonuse values such as existence and bequest values" under 43 C.F.R. § 11.83, the lack of assessment of service losses to catch-and-release anglers, and an overly narrow application of regulatory criteria in the Restoration Plan emphasizing injured resources, resulting in the exclusion of trout specific projects in Alternative B. Josefson also raised concern about the lack of a total damages value against which to measure the amount of the settlement. Joe Ross, a former Trout Unlimited state officer and author, offered that the Waynesboro trout grow-out facility would introduce stronger and healthier fish. Phillip Musegaas, representing the Shenandoah and Potomac Riverkeepers Network, largely supported the settlement with the caveat that he did not think the renovation of the smallmouth fishery would restore fishing trips or otherwise make a difference and noted the data gap involving trout damages. Musegaas felt that part of the settlement monies should be reallocated to the trout grow-out facility.

         Others spoke in favor of the proposed Consent Decree. Daniel Cristol, a Professor of Biology at The College of William and Mary, has studied the effects of mercury on birds in the South River habitat since 2005. Cristol stated that the impact on birds stemming from fhe South River mercury contamination is the worst recorded in the world. Cristol detailed fhe massive loss of birds since 1929, and opined that these objectively quantifiable losses will continue into the future. Cristol reported that the scientific data undergirding this settlement are "the most comprehensive and solid numbers ever used for a contaminant settlement." As regards the bird data, Cristol added that they were the result of more effort and study than any other case of mercury pollution, and that this settlement will stand as a model for research and collaborative restoration. Cristol opined that "this settlement could be better because it could be a little bit bigger, it's not enough to restore all those birds, but I think it's a very satisfactory settlement. A lot of good data and thought and good intentions were put into it, and I think it will go a long way to restoring the resources that were lost due to mercury." Peter Van Acker, of the Augusta Bird Club, voiced general support for the plan, especially as it benefitted songbirds and provided for land acquisition. Van Acker expressed an urgent need for action, and agreed that the trout community had reasonable points. Van Acker referenced a much larger DuPont settlement over a chemical leak in West Virginia and asked the court to take a big picture look. Aaron Revere stated that he was very much in support of the settlement, and believed it provided for numerous miles of bank restoration, improved water ...


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